Franchising in Canada - 2019 Year in Review

  • February 18, 2020
  • John Clifford, W. Brad Hanna, Adriana Rudensky, Mitch Koczerginski, Andae Marrocco and Paola Ramirez


Franchisee or Employee?

Modern Cleaning Concept Inc. v. Comité paritaire de l’entretien d’édifices publics de la région de Québec, 2019 SCC 28

Modern Cleaning Concept Inc. was one of the most anticipated decisions by the franchise community in 2019. In this case, the Supreme Court of Canada affirmed that a franchise agreement cannot serve to disguise an otherwise valid employer-employee relationship. Here, the Court characterized a franchisee who operated a cleaning business as an employee because it was the franchisor who assumed the business risk and had the opportunity to make a profit. 

The decision serves as an important reminder to franchisors that the language of the franchise agreement, on its own, will not determine the nature of the relationship with their franchisees. Courts will examine the arrangement as a whole to decide whether an individual is an employee or an independent contractor. As such, franchisors should carefully consider their relationships with their franchisees and any surrounding special circumstances to confirm whether a properly characterized franchisor-franchisee relationship actually exists.